"The bank's strategy entails greater focus on yield and on cross-selling of higher value-added services through its team of relationship managers.

"The new strategy also adds a niche regional retail banking operation to restructured wholesale banking activities," it added.

In Moody's opinion, GIB's efficiency continues to be very high despite the additional costs resulting from investments in the implementation of the new strategy.

The bank's cost-to-income ratio during 2011 was a solid 53.1pc (the 2008-2010 average was 44.2pc).

One of the major drivers in the rating reaffirmation is GIB's improving funding profile. Moody's said in its report that the bank "maintains a strong funding and liquidity position, benefiting substantially from its Saudi government ownership.

"Government ownership (and availability of support that this implies) assists the bank in sourcing wholesale funding from companies, government-related entities and financial institutions and positively influences both the stability and the cost of this funding," it added.

The agency said that the "lengthening of the maturity of GIB's funding base and parallel shortening of the maturity of its loan book has led to an improvement in the bank's funding profile.

"The bank has taken further advantage of its ownership to raise substantial amounts of medium-term funding at low cost from the Saudi market, further strengthening its liquidity management.

"The bulk of longer term loans are now primarily funded by the bank's significant capital and term funding resources," it added.

"We believe Moody's reaffirmation of the bank's ratings is a very significant achievement and an independent endorsement of its efforts and the actions taken over the past few years to restructure operations and improve profitability and funding," GIB's chief executive Dr Yahya A Alyahya said.-TradeArabia News Service